Stock Lending & Borrowing Mechanism (SLBM)

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Securities Lending & Borrowing Scheme (SLBS) is a stock lending & borrowing mechanism whereby Demat stock holders can lend their stocks to short sellers who sell scrips that are not owned by them at the time of trading. Hence, it allows short sellers to borrow securities from investors for making delivery.

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How does it Work?

For example, you have a negative view on the price of a stock. You can borrow shares from SLB and sell them. You can buy them back if and when the price falls. Your profit is the difference between the selling price and the buying price, after deducting the interest rate.

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Let’s say stock price of Company Z is trading at Rs. 200. You decide to short sell 100 shares of Z for a total of Rs. 20,000. Suddenly, disappointing quarterly profits cause the share price of Z to fall to Rs. 190. You can now buy 100 shares of Z for Rs. 19,000.

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You then return the shares of Z to the lender who accepts the return of the same number of shares lent, regardless of the fact that the shares prices have fallen.

You retain the Rs. 1,000 difference (minus interest and other costs). You make a profit.

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As an Authorized Intermediary(AI), Dodhia Securities provides this service that has a list of benefits for its investors such as :-

• Long Term investors can put their idle holdings to good use & earn some extra income without selling their stocks.

• Arbitragers & Short sellers have access to these stocks through the unique system of SLBS creating a win-win situation for both borrowers & lenders (Investors)

• Extremely simple & easy to understand process, just like buying & selling of shares on the exchange.

• Sushil’s expert team ensures best available returns at a very nominal fee.